Recent figures released by the RBA about Australia’s private debt levels for June 2007 suggest that Australians are slowing their credit card spending, when compared to similar periods in recent years. While total Australian credit card debt was up $508 million from May 2007, the rate at which the national credit debt is increasing has begun too slow.
Australia’s total credit debt now stands at $40.7 billion, with the average balance per card at $3,014, up $23 in June. Growth in debt for the year to June was 6.7%, the lowest rate in the past 12 months. The number of credit card accounts grew in June to 13.52 million, an increase of 65,000 for the month, and 570,000 for the year.
CommSec Senior Economist Martin Arnold said that Australians appear to be increasingly cautious about their credit debt, as debt increases were at their lowest level in 14 months.
“Consumers are continuing to be prudent when using their credit cards, with cash advances recording the fourth fall in the last five months”. “Australians are paying more attention to budgeting in the current environment.”
However, while the signs are that Australians are gaining a greater awareness of their debt situation, the increase in credit debt alone for the year to June was equal to total credit card debt in May 1990.
Evidence suggests that this newfound conservatism is more likely the result of increasing basic costs of living, most notably rising petrol prices.
‘In terms of the proportion of the limits people are using - there’s still around $5000 per card that is left over in terms of credit that people haven’t used,’ Mr. Arnold said.
“The average credit limit per card is a bit over $8000 ... so they’re not even half way to being maxed out’.
This excess capacity when combined with Australian consumers’ propensity to consume retail goods and services suggests that the threat of another rate rise in early 2008 remains very real.